Last updated: 24 April 2015
The payments arena has become a battleground for technology innovation. Just a few months ago Apple launched its ApplePay solution; and Google, Square and others are also developing systems and services to try to grab a share of the market.
Whilst each of these has subtle differences, they all have one overwhelming factor in common – convenience. In that they make paying for items significantly easier for consumers. Contactless payments systems mean I can go into a shop and skip past traditional checkout queues, encumbered by Chip & Pin, cash, or other payment transaction barriers. Given how busy all our lives seem to be, these incremental promises of lifestyle enhancements are really vital: we want to save time, and eliminate the tedium of remembering passwords, counting out coins or even entering pin codes if we don’t need to.
Ongoing improvements in technology such as geolocation and biometrics will make the payments process even easier, and ensure strong authentication. In a survey of over 2,000 UK adults commissioned by Visa Europe published this week, 76 per cent said they would feel comfortable making a payment using biometric security and 69 per cent believe this would make their lives faster and easier.
Those doing the selling, rather than the shopping, are also benefitting. Convenience encourages purchases. By removing the physical barriers, such as pin codes, signatures or juggling card details; as well as unconscious barriers, such as getting frustrated at a long queue of cars at a toll booth – shoppers are far more likely to make spontaneous purchases. This principle could be applied to things such as the congestion charge in London or upgrading to First Class on a plane or train – after you board! Or even selecting who will be the person sitting next to you. KLM already offers a service along these lines called “meet & seat”. And indeed, Transport for London has already seen a huge uplift since implementing its contactless payments, over and above its Oyster NFC system. Over time, we’ll see objects become retailers in their own right – tap your phone on a poster to purchase an app or e-book, for example, no need for retail space, shop assistants, check-out counters or loose change.
Over time, I predict we’ll see this flow of money reverse direction. By this I mean that contactless payment could also be used by the individual to receive money much more easily, and several banks have introduced services along these lines, like Barclays Pingit. I think this is just the beginning though: new models will emerge for different payment applications, for example you could imagine getting paid directly via your phone for taking part in market research on the street or for watching an advert on your phone. The money from this could then be saved and spent elsewhere, via a virtual wallet.
At the end of the day money is the not the important factor here: it’s all about securely speeding up transactions so we have more time to spend doing the things we love. We’re just scratching the surface about how new payment mechanisms can transform both the consumer experience and the business models of a wider range of businesses as well – in the retail sector and beyond.